Redundancy Update for the Recruitment Sector
With the UK economy in recession, and predicted by some to remain so for the whole of 2023, many recruitment organisations may have to consider restructuring or making redundancies this year.
With that in mind, we have set out below a reminder of the basic principles to bear in mind when considering redundancies, included a roundup of some recent cases concerning redundancy, and highlighted a potential forthcoming change.
Redundancy - The Basics
Redundancy is one of the five potentially fair reasons for dismissal. A dismissal will be by reason of redundancy if it is caused wholly or mainly by the closure of the business in which the employee was employed, the closure of the workplace at which the employee was employed, or the fact that the requirements of the business for employees to carry out work of a particular kind have ceased or diminished. Although the above causes will provide a potentially fair reason for dismissal, in order for the dismissal to be fair the employer must also follow a fair procedure. In the context of redundancy, this means the employer must warn and meaningfully consult any affected employees (individually and, where more than 20 redundancies are envisaged, collectively via appropriate representatives), adopt a fair basis on which to select for redundancy (including selecting an appropriate selection pool and applying fair and objective selection criteria), and take reasonable steps to avoid or minimise redundancy by considering redeployment.
Selection Pools and Consultation - Recent Cases
In deciding whether redundancy selection is fair, a Tribunal must decide whether the employer's choice of pool is within the range of reasonable responses. The law recognises that a particular set of circumstances may give rise to a variety of permissible pools and employers therefore have some discretion as to choice of pool and will often prefer to keep the pool narrow, to minimise disruption to staff. As a Tribunal cannot substitute its own view as to the correct pool, it can therefore be difficult for an employee to successfully challenge the employers choice of pool, however, it is not impossible to do this and in two recent cases, the EAT has considered the reasonableness of employers effectively identifying a pool of one.
The first of these cases was Mogane v Bradford Teaching Hospitals NHS Foundation Trust in which Ms Mogane and another nurse carried out similar roles and were both employed on a series of fixed-term contracts. The Trust was facing financial difficulties and decided, without consultation, that it would put only Ms Mogane at risk of redundancy based on the sole criteria that her fixed term contract was due to expire first. It then went on to consult with her about potential alternative roles but none were found and Ms Mogane was dismissed as redundant. The EAT concluded that Ms Mogane had been unfairly dismissed, commenting; "It is not within the band of reasonable responses, in the absence of consultation, to adopt one criterion which simultaneously decides the pool of employees and which employee is to be dismissed." It stated that, for redundancy consultation to be meaningful, it must take place at a stage when an employee can still potentially influence the outcome which in this case had not happened. This case is reported in detail in our recent article.
The second case was Teixeira v Zaika Restaurant Ltd in which Mr Teixeira, one of ten chefs employed at a restaurant experiencing reduced trade due to the pandemic, was told without warning or consultation that he was redundant. He brought a claim, which succeeded at first instance on the grounds that his dismissal was procedurally unfair. However, the Tribunal also concluded on the facts (including the fact that he was the only non-speciality chef, the most junior chef, and had the shortest service) that, had a fair procedure been followed, he would have been dismissed in any event and reduced his compensation to nil. The EAT however upheld an appeal against this reduction in compensation commenting that, not only would a fair procedure have delayed the dismissal, meaning that some compensation was due to reflect the delay, but also adding that it was wrong for the Tribunal to conclude that consultation would have made no difference to the outcome. The EAT's view was that some consultation may have resulted in a larger selection pool or affected the selection criteria and therefore could have changed the outcome. Our full case report appears in our recent article.
These two cases serve as a useful reminder that, in order for consultation to be meaningful, it should take place when it can still potentially influence the outcome and, unless the employee is in a unique role, this is likely to be prior to adopting and applying the selection criteria.
Reasonable Adjustments - Recent Case
When those with disabilities are at risk of redundancy, it is important for employers to consider whether there are any reasonable adjustment that need to be made to the usual redundancy process in order to remove any disadvantage caused by the disability, otherwise the employers risk a claim of unfair dismissal and disability discrimination. One common adjustment that is often made in a redundancy context is the discounting of disability related absences from an employee's absence record where absence records are used as part of the selection criteria.
However, in the recent case of Hilaire v Luton Borough Council, the EAT were asked to consider whether it was a reasonable adjustment for an employer to remove the requirement for a disabled employee, who was at risk of being made redundant from his role during a restructuring exercise, to interview for a role that was available in the new structure. Mr Hilaire claimed that, due to his disability, he was unable to attend an interview and argued that the employer should simply slot him into a role without an interview, despite the fact that 13 other candidates had already been interviewed for the role. On the facts, the EAT found that Mr Hilaire could have attended the interview if he had wanted to, but also commented that Mr Hilaire's contention that it would have been a reasonable adjustment to give him a role without an interview was wrong, noting that whilst it may have alleviated any disadvantage, it would also have affected the other potentially redundant employees and was therefore not reasonable. The EAT commented that a reasonable adjustment is not "a vehicle for giving an advantage over and above removing the particular disadvantage".
Our full report on this case appears in our recent article. This case serves a useful reminder that, whilst employers need to consider the needs of disabled individuals during a restructuring process, they must also balance this with the needs of their other employees and the duty to make adjustments exists to remove disadvantage, not to provide advantages over and above that.
Forthcoming Changes
Changes are also anticipated to the protection afforded to potentially redundant employees on maternity leave. Currently a woman on maternity leave and at risk of redundancy must be offered suitable alternative employment, where a position is available. Proposals set out in the Protection from Redundancy (Pregnancy and Family Leave) Bill would extend the period of protection so it applies from the date the employee notifies the employer of the pregnancy, to six months after the end of the leave, and would also extend the protection to those on adoption or shared parental leave.
